As crude oil price continues its descent, and the economy falters,
strong indications have emerged that workers in both private and
public sectors are faced with mass retrenchment.
Stakeholders in both sectors, who spoke to SUNDAY PUNCH on
Friday, painted a gloomy picture of the economy and the prospects
of workers in the new year. They based their projections on recent
happenings in the Nigerian and global economies.
Oil prices have been in steep decline since June 2014 as a result of
slow demand growth and the United States’ oil boom, which has
increased supply. The global oil benchmark, Brent, against which
Nigerian oil is priced, on Tuesday, tumbled below $58 per barrel,
hitting its lowest levels since May 2009.
PUNCH had exclusively reported on Tuesday that at least 70,000 civil
servants in 30 ministries, departments and agencies of the Federal
Government had yet to receive up to three months salaries.
While the Federal Government is believed to owe workers of the
Ministry of Labour and Productivity salary arrears ranging from one
to three months, 11 state governments could not pay December
salary to workers. Three of the states – Benue, Plateau and Osun –
have been reported to owe workers three months’ salary arrears.
In separate interviews with SUNDAY PUNCH, stakeholders expressed
fears that companies and public institutions were planning to
address the downturn in the economy with cost-cutting measures
and downsizing.
On Friday, the Petroleum and Natural Gas Senior Staff Association
of Nigeria gave indications to this effect when it raised the alarm
that companies, especially petroleum companies, had plans to
retrench staff.
According to the association, non-core employees of oil firms in the
country may be asked to quit their jobs, if the fall in oil prices
persists till April or May.
The Media Officer, PENGASSAN, Mr. Babatunde Oke, told SUNDAY
PUNCH that employers had grown weary of the slump.
“The effect might be severe if it continues till May because some
employers are already complaining that they may need to shed
weight, if it persists till then. Of course, it will affect contract staff, if
the slump persists,” Oke added.
Similarly, the Deputy President (South), National Association of
Small Medium Enterprises, Mr. Orimadegun Agboade, stated that
retrenchment had already begun in some sectors.
He said, “We closed for the year earlier than usual. Ordinarily, we
take a break close to Christmas. But with the way things are right
now, many companies closed two weeks before the normal closing
date.
“Based on recent events, federal, state and local governments still
owe salaries of up to three months. It is an indication that things
are not right at all. In fact, many of us are afraid of what will
happen.”
Agboade stated that the current foreign exchange rate is the
harbinger of the gale of retrenchments that would sweep workers
out of the manufacturing sector.
“For instance, I am a manufacturer of medicine; I received a notice
from my bank two weeks ago that the Federal Government had
placed an embargo on all letters of credit. The implication of this is
that immediately we run out of the raw materials we have now, the
hope of getting more will be slim, or it won’t come on time.
“In the pharmaceutical industry, where I belong, close to 98 per cent
of our raw materials are imported. A lot of companies are already
cutting salaries,” Agboade added.
The NASME Deputy President further said the scale of retrenchment
could be as high as 25 per cent. He warned that if things were not
sorted out quickly, it could reach 50 per cent.
Similarly, the Chairman, National Association of Small Scale
Industrialists, Lagos State chapter, Mr. Segun Kuti-George, said the
fact that the foreign exchange rate was not in equilibrium with the
naira was a sign that mass retrenchment might be closer than
expected.
“We have more naira chasing fewer dollars now. Also, the monetary
policy is moving from 12 per cent to 13 per cent higher interest rate.
We now have a higher rate of exchange, which inherently means
inflation.
“It means that prices of imported and locally-made goods will go
up, which would mean lower demand and, therefore, lesser profits
for companies. This may then lead to layoffs,” he explained.
The Director-General, Lagos Chamber of Commerce and Industry,
Muda Yusuf, predicted that the year would be challenging for
businesses, as the cost of production would increase, while
purchasing power would decline.
He explained that businesses would have to look at all possible
options for survival, including cost reduction in other areas. The
process of reducing costs, according to him, may result in cutting
the number of employees.
At the presentation of the 2015 budget to the National Assembly,
the Minister of Finance and Coordinating Minister of the Economy,
Dr. Ngozi Okonjo-Iweala, had announced more austerity measures.
She had explained that the measures were aimed at cushioning the
economic impact of the drop in oil prices.
She added that the measures would be implemented from the
beginning of the second quarter of 2015 to boost the ratio of non-oil
revenues to oil revenues. The Federal Government’s 2015 budget
estimates of about N4.3trillion was planned with a $65 oil price
benchmark.
Workers vow to resist retrenchment
Meanwhile, workers have threatened a showdown in the event of
mass sacking. Officials of the organised labour who spoke to
SUNDAY PUNCH warned the federal and states governments against
laying off workers.
The Association of Senior Civil Servants of Nigeria told SUNDAY
PUNCH that it had mobilised members nationwide to resist any
planned retrenchment of workers by the Federal Government.
The Secretary-General of ASCSN, Mr. Alade Lawal, in an interview
with one of our correspondents on Friday in Abuja, said workers
should not be made to bear the burden of the country’s distressed
economy.
Lawal said, “As for the issue of resorting to retrenchment as a result
of the drop in the price of crude oil in the international market,
labour will surely resist it.
“We have already sensitised and mobilised our members on the
matter. We workers did not create the problem and we will surely
not allow the ruling elite to use us as tools to be dumped because of
the temporary setback in the pricing of oil.
“When the going was good, we were left unattended to. Now that
the chicken has come home to roost, they, and not innocent
workers, should bear the brunt.
“We are fully prepared and on red alert, waiting for signals from the
two labour centres in the event of any attempt to retrench workers
as part of recently introduced austerity measures.”
Also speaking, the President-General of Trade Union Congress of
Nigeria, who is also the President of ASCSN, Mr. Bobboi Kaigama,
said the TUC would ensure that any attempt to retrench worker was
resisted.
He said, “TUC would resist any attempt to retrench workers; all the
definitions of resistance put together would be done, including
protests and strikes.
“Let’s fight corruption, let’s fight oil theft, let’s improve our
Internally Generated Revenue, let’s be prudent in our expenditure,
develop our infrastructure and tourism potential; those are the
things that would give us money, not sacking workers.
“We shall resist any attempt to retrench workers. They can’t try
retrenchment because we shall resist it out rightly.”
On his part, the General Secretary, NLC, Dr. Peter Ozo-Eson, warned
that the NLC would meet to take an “appropriate decision”, should
any state government decide to sack workers.
He said, “Our position, as already stated, is that there are
adjustments that government can make by cutting the cost of
governance.
“We have already warned that they shouldn’t allow workers to be
victims of the downturn in the oil price.
“We believe that the down-turn should not be used to sack workers,
they should cut excess waste and the cost of governance. We have
a situation where a governor has a retinue of excess aides and
entourages; all these can be cut. These are areas where we feel
adjustments should be made.”
Across Nigeria, state chapters of the organised labour unions also
warned that retrenchment would be resisted.
In separate interviews with our correspondent in Ilorin, the
Chairman, Nigerian Labour Congress, Kwara State chapter, Mr.
Farouk Akanbi, and his Trade Union Congress counterpart, Mr.
Olumoh Kolawole, stated that workers in the state would resist any
attempt by the state government to downsize.
Akanbi said, “We do not believe that it will be a good thing for any
government to retrench workers. We are going to resist any
retrenchment of workers because we know that the cost of
governance in Nigeria is where we have problem. It is not in terms
of the payment of the workers’ salaries.
“We will ensure that workers will down tool, which is one of the
weapons we have if negotiations fail.”
Speaking in the same vein, Kolawole said, “Part of governance is
that government will look after the welfare of the workers. I do not
see any reason for retrenchment. I believe that there are many ways
we can assist government to jerk up revenues. The IGR can be
increased. We know where the loopholes are and we can advise
government appropriately.”
The Chairman, NLC in Edo State, Mr. Emmanuel Ademokun, said in
the event of any retrenchment, “We will give a 24-hour strike notice.
It (retrenchment) won’t happen.”
State governments allay fears
Against the backdrop of widespread fears of mass retrenchment
and threats of showdown by workers, state governments have said
they would look for ways to generate more income. In Bayelsa
State, Governor Seriake Dickson, who complained recently that his
administration could no longer sustain the N500m monthly wage bill
of 200 political aides, said he would “downsize or rightsize” political
appointments.
The state’s Commissioner for Information, Mr. Markson Fefegha,
told SUNDAY PUNCH that the government’s finance team was
working to arrive at a sustainable wage bill.
Fefegha said the government did not have any plan to retrench
workers. Rather, he said, the government might “downsize the
political class”, if the dwindling resources continued.
Similarly, the Abia State Government said it was not considering
retrenchment of workers. It, however, admitted that the state was
facing economic hardship.
The state has a workforce of about 21,000, in addition to its 11,000
primary and secondary school teachers, according to information
from the state’s leadership of the NLC.
Abia, before the economic downturn, received a monthly allocation
of between N3bn and N4bn, with a monthly wage bill of about N2.5
billion.
The state Commissioner for Information and Culture, Mr. Anthony
Agbazuere, told one of our correspondents in Umuahia that though
the state government was feeling the impact of the drop in oil price,
the sacking of workers was out of contemplation.
He, however, said government was making efforts to plug all
financial leakages and shore up its internally generated revenue.
The state Commissioner for Finance, Dr. Philip Ntoo, also said the
drop in the federal allocation had adversely affected the state’s
revenue, as 90 per cent of its income depended on federation
allocation.

Fresh air

The Nigerian government should start diversify our economy. It is wrong for us to rely solely on oil and gas earning for our revenue.

A stitch on time saves nine.

States are talking, Abia join...

Owing civil servants since September 2014..

NLC and TUC should resist any attempt to sack any worker in any sector. The waste in the National assembly, the state assemblies and the political class should be cut down. Salaries of legislators and 20 car convoys of governors should be cut down.

Bunch of selfish Nigerians..

Where is our foreign reserves to fund the deficit ? And the U.S. oil boom will continue to improve so I don't see this situation going away this year. A place where things are planned properly.

#FarmingThings...

Now, i pity importers if Letters of Credit have been placed on hold.

They should stop importing what we can create and manufacture in the country. Let us support the car industry in Nnewi and Enugu axis. The manufacturing industry in Aba. The Agric sector of Northern Nigeria.

This is good for the economy... I pray things get so cheap that I will buy off peoples plots of lands.